05.19.2016 Slator​

​VerbalizeIt Pivots Into Smartling’s Arms

Three years after pivoting away from a consumer model toward enterprise service (“Customer acquisition costs were too high and the lifetime value of the customers was too low,” co-founder Ryan Frankel told The Wall Street Journal in October 2014), VerbalizeIt forgoes independence and joins Smartling.

VerbalizeIt was founded by Wharton MBAs Ryan Frankel and Kunal Sarda in 2011 and received its first funding from accelerator TechStars in 2012. To date, funding has totalled USD 2.45m, according to CrunchBase.

In May 2013, the startup received national attention through an appearance on the TV show Shark Tank. By May 2015, the company generated monthly revenues of USD 100,000 at a monthly growth rate of 40%, according to a presentation by co-founder Sarda. We were unable to ascertain whether these growth rates continued.

Speaking to Slator, Smartling CEO Jack Welde stayed silent on the purchase price or any other financials around the transaction, which closed in early May 2016.

Asked about the rationale behind the acquisition, Welde said VerbalizeIt’s multimedia capabilities close a gap in Smartling’s translation management system (TMS). Welde pointed out, “Capabilities around subtitling, video and audio transcription and translation were things we never got to at Smartling. We always intended to build it. When our customers would ask us about it, we ended up farming it out to a language services provider.”

He also mentioned that video has been a pain point for Smartling. “I’ve always been concerned that video is taking off in huge ways and it’s just been an area that we haven’t been able to address as well as I would’ve like to.”

Asked about VerbalizeIt’s remote interpreting capabilities, Welde pointed out that “there are a number of unknowns around it. It’s a new area for us that we are excited about.” He did admit though that incumbent remote interpreting vendors like Cyracom or LanguageLine are “not going to lose any sleep over this right now.”

“Capabilities around subtitling, video and audio transcription and translation were things we never got to at Smartling”―Jack Welde, CEO Smartling

Smartling’s Jargon acquisition in early April 2016 was about technology. With VerbalizeIt, Smartling is also buying a client roster and talent. According to Welde, when they compared client lists, the overlap was a mere 4%.

On the talent side, VerbalizeIt founders Frankel and Sarda are joining Smartling. According to a press release Slator received ahead of publication, “Frankel is tasked with developing channel and partnership alliances, while Sarda will focus on the product experience for customers and translators.

Asked whether Smartling plans any additional funding rounds, Welde said the company is well capitalized at the moment and he does not need the dilution. He added, however, that he remains open should an opportunity present itself.

On the broader industry outlook, Welde cautioned that there is a fair amount of uncertainty in the global markets and the funding environment has gotten more difficult. Welde pointed out though that he has not seen a slowdown among Fortune 500 spending, and the trend toward mobile, among other things, will continue to drive demand for translation and localization.